Tesla is winning in the car industry - January 08, 2020

Tesla is winning in the car industry

Tesla had an interesting 2019. They started with serious setbacks and losses, but at the end of the year they showed that they can generate profits and meet their promised production. The brand is a roller coaster for investors now, but it may be more successful in the future.

Tesla had a rollercoaster of a year, but by the end of it, it seems like the EV company finally achieved success. This is present in their stock prices: it went to record highs in the last weeks, almost tripling in value since May.

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Sales and new plant help the most

The prices went up mostly due to a very successful second part of 2019. In the 3rd quarter of 2019 they produced more than 96 thousand vehicles and sold 97 thousand globally. This was a much needed win for the company.

Their long-standing production problem also seems to be solved now: they launched their new plant in China incredibly fast. (To do so, they got some favors and a $1.4 billion loan from the Chinese government.) With this step they were able to lower their car prices, too, probably leading to even higher sales.

All these steps made Tesla the first car company that’s able to sell EVs at a sustainable profit, at least for now.

The most valuable premium car company

With its shares skyrocketing, Tesla became the most valuable premium car company on Earth. Only Toyota and Volkswagen overtake it, but those are far from premium brands. This result is closely connected to their late sales success. (We already wrote about how Tesla beat Mercedes and BMW in 2018.)

Value of biggest car companies

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This is an incredible achievement, but looking at the stock prices of the company, it might change anytime. Tesla is doing great now, but it’s still a volatile company.

What will the future bring for Tesla?

Tesla’s value may skyrocket, but it’s far from being the most successful car company in terms of sales, revenue and profit. What’s sure now is that investors started to believe in it again. This belief will not be enough on the long-term, but if the company manages to be profitable and meet its demand, it might have a bright future. This is a huge if, but these positive sentiments were seen even after their troubled Cybertruck announcement too.

Another important thing to consider when talking about Tesla is that they’re not only building cars, but are heavily invested in technologies like autonomous, self-driving vehicles and new, more effective battery technologies. These might all lead them to create an even more valuable and diversified company.

Disclaimer: This analysis is for general information and is not a recommendation to sell or buy any instrument. Since every investment holds some risk, our main business policy is based on diversification to minimize threats and maximize profits. Innovative Securities’ Profit Max has a diversified portfolio, which contains liquid instruments. This way, our clients can maintain liquidity, while achieving their personal investment goals on the long term.

(Header image: Tesla)